Fits in strategic human resource management and methodological challenge: empirical evidence of influence of empowerment and compensation practices on human resource performance in Canadian firms

This study attempts to answer three questions: 1) How does the methodological approach used to measure fit among practices influence the results obtained? 2) To what extent do bundles of empowerment and compensation practices individually influence human resource outcomes? and 3) Does the fit between these bundles of practices increase the prediction of the level of discretionary effort, turnover and productivity? Following a two-wave survey strategy, statistical analyses performed on 128 Canadian companies suggest that the statistical methods used to measure fit are not interchangeable. The findings reveal that the use of an extensive relational empowerment strategy is significantly and negatively related to voluntary turnover when accompanied by a compensation program that rewards performance. In contrast, a compensation strategy that supports good working conditions or the use of financial incentives seems sufficient to influence human resources performance. Nonetheless, the results militate in favour of adopting a configurational approach with empirical deviation profile to fit to better understand the complexity of the equifinality effect of HR strategies. Lastly, the polynomial regression results question the linearity assumption of the relationship between empowerment, working conditions and productivity.

[1]  J. Pfeffer,et al.  Putting people first for organizational success , 1999 .

[2]  William N. Cooke.  Employee Participation Programs, Group-Based Incentives, and Company Performance: A Union-Nonunion Comparison , 1994 .

[3]  Stephen Wood,et al.  Getting the Measure of the Transformed High-Performance Organization , 1999 .

[4]  J. Guthrie,et al.  Alternative Pay Practices and Employee Turnover: , 2000 .

[5]  Donald P. Schwab,et al.  Merit Pay Practices: Implications for Pay-Performance Relationships , 1990 .

[6]  Sam T. Johnson.  Work Teams , 1993 .

[7]  A. V. D. Ven,et al.  The Concept of Fit in Contingency Theory. , 1984 .

[8]  Benson Rosen,et al.  Total quality and human resources management: lessons learned from Baldrige Award-winning companies , 1993 .

[9]  J. Pfeffer.  Competitive Advantage Through People , 1994 .

[10]  R. Mcnabb,et al.  The Impact of Financial Participation and Employee Involvement on Financial Performance , 1998 .

[11]  George P. Baker,et al.  Incentives and cooperation: the joint effects of task and reward interdependence on group performance , 1997 .

[12]  Cynthia Hardy,et al.  The Power Behind Empowerment: Implications for Research and Practice , 1998 .

[13]  Luis R. Gomez-Mejia,et al.  The effectiveness of organizationwide compensation strategies in technology intensive firms , 1997 .

[14]  A. Tsui,et al.  Configurational Approaches to Organizational Analysis , 1993 .

[15]  G. Spreitzer.  PSYCHOLOGICAL EMPOWERMENT IN THE WORKPLACE: DIMENSIONS, MEASUREMENT, AND VALIDATION , 1995 .

[16]  A. V. D. Ven,et al.  Alternative forms of fit in contingency theory. , 1985 .

[17]  Pay Systems and Organizational Flexibility , 2009 .

[18]  William H. Glick,et al.  Fit, Equifinality, and Organizational Effectiveness: A Test of Two Configurational Theories , 1993 .

[19]  R. Peccei,et al.  Delivering Customer-Oriented Behaviour through Empowerment: An Empirical Test of HRM Assumptions , 2001 .

[20]  L. Hunter.  The adoption of innovative work practices in service establishments , 2000 .

[21]  James N. Baron,et al.  Consistent Human Resource Practices , 1999 .

[22]  Adams Js.  Towards an understanding of inequity , 1963 .

[23]  Maury Gittleman,et al.  “Flexible” Workplace Practices: Evidence from a Nationally Representative Survey , 1998 .

[24]  Luis R. Gomez-Mejia,et al.  Structure and process of diversification, compensation strategy, and firm performance , 1992 .

[25]  Clint Chadwick,et al.  Examining Non-Linear Relationships between Human Resource Practices and Manufacturing Performance , 2007 .

[26]  Jeffrey B. Arthur,et al.  Effects of human resource systems on manufacturing performance and turnover , 1994 .

[27]  Denis Chênevert,et al.  Le rôle des stratégies externes et internes dans le choix des politiques de rémunération , 2003 .

[28]  C. S. Koberg,et al.  Antecedents and Outcomes of Empowerment , 1999 .

[29]  K. Thomas,et al.  Cognitive Elements of Empowerment: An “Interpretive” Model of Intrinsic Task Motivation , 1990 .

[30]  David Fairris,et al.  Wages and the Intensity of Labor Effort: Efficiency Wages Versus Compensating Payments , 1994 .

[31]  J. Arthur,et al.  The effects of gainsharing on grievance rates and absenteeism over time , 1999 .

[32]  Paul Osterman,et al.  The Wage Effects of High Performance Work Organization in Manufacturing , 2006 .

[33]  Raymond T. Sparrowe,et al.  An examination of the mediating role of psychological empowerment on the relations between the job, interpersonal relationships, and work outcomes. , 2000, The Journal of applied psychology.

[34]  Ofer Meilich,et al.  Bivariate Models of Fit in Contingency Theory , 2006 .

[35]  Mark A. Huselid.  The Impact of Human Resource Management Practices on Turnover, Productivity, and Corporate Financial Performance , 1995 .

[36]  Stephen W. Nason,et al.  A Dimensional Analysis of the Relationship between Psychological Empowerment and Effectiveness Satisfaction, and Strain , 1997 .

[37]  Cathy A. Enz,et al.  The Impact of Empowerment on Service Employees , 1995 .

[38]  Patrick M. Wright,et al.  The role of human resource practices in petro-chemical refinery performance , 1999 .

[39]  R. Liden,et al.  Perceived Organizational Support And Leader-Member Exchange: A Social Exchange Perspective , 1997 .

[40]  Gloria Harrell-Cook,et al.  Manufacturing Advantage: Why High-Performance Work Systems Pay Off , 2001 .

[41]  D. Levine.  Participation, Productivity, and the Firm's Environment , 1990 .

[42]  Peter A. Bamberger,et al.  Empowerment Cognitions and Empowerment Acts , 2000 .

[43]  R. N. Kanungo,et al.  The Empowerment Process: Integrating Theory and Practice , 1988 .

[44]  G. Spreitzer.  Social structural characteristics of psychological empowerment , 1996 .

[45]  John Paul Macduffie.  Human Resource Bundles and Manufacturing Performance: Organizational Logic and Flexible Production Systems in the World Auto Industry , 1995 .

[46]  Michael H. Kutner.  Applied Linear Statistical Models , 1974 .

[47]  Michael T. Brannick,et al.  A role and expectancy model of participative decision-making: A replication and theoretical extension , 1990 .

[48]  Pearl Steinbuch,et al.  Compensation: Theory, Evidence and Strategic Implications , 2004 .

[49]  L. Raymond,et al.  FIT IN STRATEGIC INFORMATION TECHNOLOGY MANAGEMENT RESEARCH: AN EMPIRICAL COMPARISON OF PERSPECTIVES , 2001 .

[50]  David B. Balkin,et al.  Compensation, Organizational Strategy, and Firm Performance , 1992 .

[51]  R. Eisenberger,et al.  Perceived organizational support. , 1986 .

[52]  Edward E. Lawler,et al.  Creating high performance organizations , 2005 .

[53]  David B. Greenberger,et al.  The Relationship between Pay-for-Performance Perceptions and Pay Satisfaction. , 1988 .

[54]  J. S. Adams,et al.  TOWARD AN UNDERSTANDING OF INEQUITY. , 1963, Journal of abnormal psychology.

[55]  N. Venkatraman,et al.  Environment--strategy coalignment: an empirical test of its performance implications , 2011 .

[56]  S. Snell,et al.  Integrated Manufacturing and Human Resource Management: A Human Capital Perspective , 1992 .

[57]  Stephen Wood,et al.  Human resource management and performance , 1999 .

[58]  John Godard,et al.  High Performance and the Transformation of Work? The Implications of Alternative Work Practices for the Experience and Outcomes of Work , 2001 .

[59]  Robert M. Verburg,et al.  Configurations of human resource management practices: a model and test of internal fit , 2007 .

[60]  P. Osterman.  How Common is Workplace Transformation and Who Adopts it? , 1994 .

[61]  Jae-Nam Lee,et al.  IT Outsourcing Strategies: Universalistic, Contingency, and Configurational Explanations of Success , 2004, Inf. Syst. Res..

[62]  Barry Gerhart,et al.  Horizontal and vertical fit in human resource systems. , 2007 .

[63]  Hong Y. Park,et al.  Organizational and Environmental Determinants of Functional and Dysfunctional Turnover: Practical and Research Implications , 1994 .

[64]  Susan J. Lambert,et al.  Added Benefits: The Link Between Work-Life Benefits and Organizational Citizenship Behavior , 2000 .

[65]  P. Blau.  Exchange and Power in Social Life , 1964 .

[66]  S. Jackson,et al.  Understanding human resource management in the context of organizations and their environments. , 1995, Annual review of psychology.

[67]  David P. Lepak,et al.  Human Resource Management, Manufacturing Strategy, and Firm Performance , 1996 .

[68]  Mushin Lee,et al.  Is Empowerment Really A New Concept , 2001 .

[69]  John E. Delery,et al.  Modes of theorizing in strategic human resource management: Tests of universalistic, contingency, and configurational performance predictions , 1996 .

[70]  Paul Milgrom,et al.  Complementarities and fit strategy, structure, and organizational change in manufacturing , 1995 .

[71]  William H. Glick,et al.  Typologies As a Unique Form Of Theory Building: Toward Improved Understanding and Modeling , 1994 .

[72]  H. Holzer.  Wages, Employer Costs, and Employee Performance in the Firm , 1990 .

[73]  Elizabeth J. Hawk,et al.  Realizing the Potential of Teams Through Team-Based Rewards , 1994 .

[74]  Jack A. Fuller,et al.  The Influence of Empowerment and Job Enrichment on Employee Loyalty in a Downsizing Environment , 2001 .

[75]  Lloyd Baird,et al.  Managing Two Fits of Strategic Human Resource Management , 1988 .

[76]  Rafik I. Beekun,et al.  Assessing the Effectiveness of Sociotechnical Interventions: Antidote or Fad? , 1989 .

[77]  C. Coulton,et al.  Interaction Effects in Multiple Regression , 1993 .

[78]  Brian E. Becker,et al.  Methodological Issues in Cross‐Sectional and Panel Estimates of the Human Resource‐Firm Performance Link , 1996 .

[79]  Denis Chênevert,et al.  Influence of Compensation Strategies in Canadian Technology-Intensive Firms on Organizational and Human Resources Performance , 2008 .

[80]  B. Gerhart,et al.  The Impact of Human Resource Management on Organizational Performance: Progress and Prospects , 1996 .

[81]  David B. Balkin,et al.  Matching compensation and organizational strategies , 1990 .

[82]  Brian E. Becker,et al.  HIGH PERFORMANCE WORK SYSTEMS AND FIRM PERFORMANCE : A SYNTHESIS OF RESEARCH AND MANAGERIAL IMPLICATIONS , 1998 .

[83]  Dexter Dunphy,et al.  Teams: Panaceas or Prescriptions for Improved Performance? , 1996 .

[84]  Neil A. Morgan,et al.  A Configuration Theory Assessment of Marketing Organization Fit with Business Strategy and Its Relationship with Marketing Performance , 2003 .

[85]  Mark A. Huselid,et al.  The Impact of Human Resource Management Practices on Perceptions of Organizational Performance , 1996 .

[86]  John Paul Macduffie,et al.  The Adoption of High‐Involvement Work Practices , 1996 .

[87]  Russ Forrester,et al.  Empowerment: Rejuvenating a potent idea , 2000 .